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Pay, Reference Points, and Police Performance

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  • Alexandre Mas

Abstract

Several theories suggest that pay raises below a reference point will reduce job performance. Final offer arbitration for police unions provides a unique opportunity to examine these theories, as the police officers either receive their requested wage or receive a lower one. In the months after New Jersey police officers lose in arbitration, arrest rates and average sentence length decline and crime reports rise relative to when they win. These declines are larger when the awarded wage is further from the police union's demand. The findings support the idea that considerations of fairness, disappointment, and, more generally, reference points affect workplace behavior.

Suggested Citation

  • Alexandre Mas, 2006. "Pay, Reference Points, and Police Performance," NBER Working Papers 12202, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12202
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    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • D0 - Microeconomics - - General
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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